Chocolate Attracts Snackers

While overall chocolate volume saw a slight dip in 2016, convenience stores helped buoy category chocolate sales.

By Brad Perkins, Contributing Editor

Despite studies that show the health benefits of chocolate, many consumers have moved away from snacks perceived as unhealthy and toward more health conscious eating.

Healthy snacks have become the norm in stores and in some places have outpaced “unhealthy” snacks in terms of sales. The good news is that despite health consciousness—or maybe because of it—people are snacking more.

“The big overarching trends are that consumers are snacking a lot—many times a day and in many different types of occasions or situations—but at the same time, they are concerned about their health,” said George Puro, president of Puro Research Group, which published the recent Packaged Facts report, “Chocolate Candy Market in the U.S.”

And though they may intend to buy healthy, when customers come to convenience stores for snacks, they buy chocolate. Though the Packaged Facts report showed that the overall volume of chocolate sales decreased almost 1% last year, individual chocolate sales rose to $21.8 billion in 2016. And convenience stores were a big reason why.

“Convenience stores are growth leaders, ahead of all other channels,” said Jenn Ellek, senior director of trade marketing and communications for the National Confectioners Association (NCA). “They have unlocked growth in trips, dollars and volume sales. C-stores grew total category dollars 1.9% last year versus 0.8% across all channels and -1.8% for drug.”

One reason for this growth is placement. Working with suppliers to ensure visibility of new and existing products and putting chocolate in areas of the store that may be unexpected or in the line of sight when customers move toward the register can result in sales to even those who are avoiding the candy aisle.

“Suppliers need to be willing to be flexible and creative in ways to generate interest and excitement with their brands,” said Joseph Bortner, category supervisor at Rutter’s Farm Stores, which operations 66 locations in Pennsylvania. “New product introductions can be extremely successful when we use our marketing tools to drive interest and excitement not only for our customers but also for our team members.”

This creativity is key as chocolate producers respond to the desire for more healthy options by encouraging sharing and portion control and introducing alternatives to chocolate, like Hershey’s sweet and salty Snack Mix line, which added Take 5 and Almond Joy varieties; Hershey’s 2015 purchase of Krave Jerky; and Mars’ goodnessknows snack square brand.

“Hybrid products, mix of snacks and chocolate, are seeing tremendous growth, which is driven by tremendous levels of innovation and consumers looking for new and different items,” Ellek said.

PIQUING PREMIUM TASTES
But the major reasons for chocolate’s continued success are the brands’ willingness to experiment with taste, premiumization and packaging.

“Convenience is benefiting from premiumization in their assortment, which is a proven way to attract sales, and is shifting to larger packs on top of the individual items,” Ellek said.

Meeting customers’ desire for higher-quality chocolate has led convenience stores to stock the shelves with innovative and higher-priced products that tip the scale in favor of snacking over health consciousness.

“The expansion of premium (chocolate) and its ability to get adults to indulge will help foster growth through next year,” Bortner said.

Premium chocolate, which NCA defines as chocolate that sells for at least $11 per pound, grew 10% over last year, mainly due to customers’ willingness to spend more to indulge, changing consumer preferences and the purchasing power of Millennials.

“Millennials, across store categories, have a greater interest in transparency and information, driving growth for premium attributes,” Ellek said. “This trend is only strengthening and will likely cause premium products to continue to grow, if not accelerate.”

Consumers, she noted, are shifting to items featuring high cocoa percentages, special ingredients such as nuts or dried fruit, or focused on specialty attributes such as organic, natural or fair trade.

“There is a lot of experimentation with fun and different ingredients from popular spices to bacon and other ingredients that would have seemed unlikely 10 years ago,” Ellek said.

A number of companies are adding texture and introducing flavors into existing products, like Mondelez’ new Oreo bars and Mars’ new M&M’s Caramel, which will launch this year.

“Hershey debuted the Hershey’s Cookie Layer Crunch bar, which has crunchy cookie bits inside Hershey’s chocolate to satisfy the desire for multiple textures in one product,” Puro said. “It’s also available in several packaging options (two different size bars as well as SUPs) so it’s available for many different snacking occasions. Last year, Hershey addressed the multi-texture trend with the introduction of Reese’s Pieces Peanut Butter Cups.”

CHANGING NEEDS
As taste and portion size have evolved so too has packaging. Brands have embraced the desire for mobility and portion control.

“In packaging, we’re seeing a lot of innovation surrounding on the go and resalable/save some for later,” Ellek said.

For example, Mars plans to shift its laydown packages into stand-up pouches for mobility and portion-saving. In addition, the candymaker plans to introduce Maltesers, the best-selling bite-size brand in the UK, to the U.S. this year. Reese’s and Hershey will follow suit, with the introduction of bite-sized Reese’s Crunchers and Hershey’s Cookies and Cookies ‘n’ Crème Crunchers.

Still, larger candy sizes are still popular with many retailers.

“Bag, box and bar greater than 3.5 ounces grew 5.3% over the past year,” Ellek said.

Through all the changes—health consciousness, introduction of new products, premium products, flavors or snacks that are hybrids of chocolate and other snacks, brands continue to be strong. And it’s not just blind loyalty. Though the NCA’s shopper research showed that “a familiar or favorite brand is the No. 1 factor in the purchasing decision,” it also helps with the introduction and success of new products.

“Brand helps drive new item trial as consumers have a baseline trust in the brand,” Ellek said. “We see power of brands at the national level, but also very strong loyalty for smaller, regional brands—making variety all the more important.”

There are many reasons for customers, health-conscious or otherwise, to desire a snack. But one reason remains true—even the most health-conscious person wants a small luxury now and then. And even if customers say they want to avoid unhealthy snacks, reality often interferes once they step inside a c-store.

“Most of the times we can idealize and think we want one thing, but when we enter convenience stores, it’s to indulge between stops when no one is looking,” Bortner said.

4 Chocolate Takeaways

1. Chocolate sales remain strong. While volume sales decreased slightly, overall sales increased to $21.8 billion and increased in convenience stores.
2. Size still matters. Though both customers and companies have embraced portable, re-sealable and shareable packaging and are rolling out updates and introductions of bite-sized items, larger sizes grew 5.3% over the past year.
3. Premium is king. Premium chocolate sales grew 10% over last year as customers’ want greater transparency and higher quality ingredients.
4. Flavors and textures are changing. Brands are experimenting with adding texture to chocolate in the form of cookies, while flavors ranging from caramel to bacon to spices are appearing on shelves.

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